Outside of tax policy, another difference that sets Utah apart from Idaho on investment and economic vitality is its approach to public debt. Idaho retains practical and philosophical barriers to borrowing and has fewer tools to put toward economic and community development and urban renewal.
“The conventional wisdom in Idaho is that saving and less taxes, ‘shrinking government,’ is ideal, that that’s the solution. In some states, and certainly in some circumstances, that is the right answer,” said Cameron Arial, a vice president in public finance with Zions Bank in Boise. “But in Idaho, that’s the only answer.”
During the recession, Utah took advantage of historically low interest rates and construction costs to invest. That catapulted Utah’s economy forward, Arial said. State GDP growth in Utah from 2010-14 was twice Idaho’s rate.
“Whereas Idaho, by virtue of its finance policies, is hunkered down, didn’t invest and quite frankly missed an opportunity,” said Arial, who serves on the state Treasurer’s Investment Advisory board that reviews and guides state investments.
Idaho ... didn’t invest and quite frankly missed an opportunity.
Cameron Arial, vice president in public finance with Zions Bank
Zions Bank’s public finance group outlined key investment policy differences between the two states in an August report:
▪ Idaho has a higher approval threshold for bonds. General obligation bonds requires two-thirds approval of voters in Idaho; Utah requires a simple majority.
▪ Idaho’s urban renewal financing mechanism is stretched for uses where it doesn’t quite fit because other options “don’t exist or are inflexible.”
▪ Idaho “invests approximately one-quarter as much in infrastructure as Utah per capita.”
Policy differences translate into statistics:
▪ Utah, along with Salt Lake City and a number of counties, hold a Triple A credit ratings. The state’s credit ranked third in a 2014 survey of state debt by Barron’s, behind only North Dakota and Wyoming. Idaho’s long-term debt isn’t directly graded, but carries an “implied” rating a notch below. And no Idaho localities are Triple A rated. Higher ratings translate into cheaper financing costs.
▪ For 2012, Idaho’s state debt of $15.1 billion broke down to $9,459 per capita, 44th among states. Utah had $35.7 billion in outstanding debt , a per capita rate of $12,513, or 37th overall. Idaho’s per capita and overall debt was lower than its five other neighboring states as well.
The bottom line from the Utah experience, Arial said, is to have a broader discussion of taxation and investment: “The reality is that it’s a much broader set of very conscious policy decisions that have really laid the groundwork for what they’re seeing down there.”